Anemic Gains in a Volatile Global Economy for the SP…..

(Click on image to enlarge)

Above Chart – S&P 500 Index Year-To-Date Performance

The S&P 500 index is currently trading at 2,100.80, with gains of 0.31% or 6.46 points as at the morning of Wednesday April 20, 2016.The index started 2016 at 2,060.56 and sank precipitously to 1,876.18 on the 20 January, 2016 as global equities markets took a solid pelting.

The SPX then staged a slight recovery to top out at 1,894.00 on the 29 January, 2016 then continued its declines through to its nadir for the year on the 11 February 2016 when it reached 1,829.08 (-10.51% for the year). From that point on, the turnaround began with the S&P 500 index and strong gains were recorded. The rally has been contingent upon the performance of crude oil which remains closely correlated with the SPX. The flattening out of the SPX in mid-April was due to a host of factors, namely the lack of confidence in the outcome of the Doha Summit in Qatar between OPEC and non-OPEC member nations, instability in commodities markets, a strong USD and poor earnings reports for Q1. The SPX has a 52-week high of 2,134.72 and a 52-week low of 1,810.10.

Above Chart – S&P 500 Index Bullish Performance

On the 19 April, 2016 the S&P 500 index finally broke through the critical 2,100 resistance level for the first time in 5 months. This was supported by strong gains from the Dow Jones Industrial Average which broke through the critical 18,000 level mark for the first time in 10 months. What was notable about the recent trading sessions on Wall Street was that both major indices recorded their fifth successive gains in six trading sessions. With the Dow Jones is up well over 18,000 and the SPX gained 0.3% to close at 2,100.80 there is now a smidgeon of confidence in US indices, despite rather lacklustre Q1 earnings reports from banks coming in. The S&P 500 index has been boosted by a strong showing in energy stocks. Pharmaceutical juggernaut Johnson & Johnson greatly assisted the performance of the S&P 500. Here are some recent performance figures from the S&P 500 index:

• The SPX is trading at approximately x 17.8 earnings
• The selloff earlier in 2016 reduced the SPX by 10.5%
• Indications that the US economy is improving are helping to boost the SPX
• SPX company earnings are likely to decline 7.6% overall with revenues dropping 1.3%

On the 19 April, 2016 the S&P 500 index finally broke through the critical 2,100 resistance level for the first time in 5 months. This was supported by strong gains from the Dow Jones Industrial Average which broke through the critical 18,000 level mark for the first time in 10 months. What was notable about the recent trading sessions on Wall Street was that both major indices recorded their fifth successive gains in six trading sessions. With the Dow Jones is up well over 18,000 and the SPX gained 0.3% to close at 2,100.80 there is now a smidgeon of confidence in US indices, despite rather lacklustre Q1 earnings reports from banks coming in. The S&P 500 index has been boosted by a strong showing in energy stocks. Pharmaceutical juggernaut Johnson & Johnson greatly assisted the performance of the S&P 500. Here are some recent performance figures from the S&P 500 index:

• The SPX is trading at approximately x 17.8 earnings
• The selloff earlier in 2016 reduced the SPX by 10.5%
• Indications that the US economy is improving are helping to boost the SPX
• SPX company earnings are likely to decline 7.6% overall with revenues dropping 1.3%

(Click on image to enlarge)

The top 10 companies with the largest percentage weights on the S&P 500 index include the following:

1. Exxon Mobil Corporation (XOM) with a 3.1172% weight
2. Apple Inc. (AAPL) with a 2.4098% weight
3. Microsoft Corporation (MSFT) with a 2.0327% weight
4. Procter & Gamble (PG) with a 1.8204% weight
5. General Electric Co. (GE) with a 1.7028% weight
6. International Business Machines Corporation (IBM) with a 1.6814% weight
7. Johnson & Johnson (JNJ) with a 1.6238% weight
8. JP Morgan Chase & Company (JPM) with a 1.6101% weight
9. AT&T Inc. (T) with a 1.5419% weight
10. Chevron Corporation (CVX) with a 1.5091% weight

Combined, the top 10 companies comprise a total of 19.05% of the total weight of the S&P 500 index. This is precisely the reason why the performance of major companies like Johnson & Johnson, Exxon Mobil Corporation, Apple Inc. or Microsoft have such an important impact on the performance of the Nasdaq 100 index, the S&P 500 index and the Dow Jones industrial average. The takeaway from the recent performance of the S&P 500 index is as follows: the short-term prospects are technically positive, given that the SPX broke through the critical 2,100 resistance level. While analysts urge caution, the general trend is positive and provided no major negative earnings surprises are reported from the leading S&P 500 companies, the trend will likely remain.